CHALLENGES IN DISTRICT ASSEMBLIES COMMON FUND AND MINERALS DEVELOPMENT FUND DISBURSEMENTS: The Implication for Local Governance and Decentralisation
The Constitution of Ghana acknowledges the importance of decentralisation and requires that Government is intentional in providing the necessary resources to subnational authorities for their management and execution of policies. Hence, the constitution specifies that the Central Government must allocate at least five per cent of national revenue into a fund known as the District Assemblies Common Fund (DACF). Monies accrued to the Fund are distributed among all Metropolitan, Municipal and District Assemblies (MMDA). Over the years, DACF has become an essential revenue source for MMDAs since other primary income-generating sources such as Internally Generated Funds are small, emanating from low economic activities and weak revenue collection efforts.
Mining communities receive additional revenue from the Minerals Development Fund (MDF) to address the harmful effects of mining and promote local economic development and alternative livelihood projects in their communities. MDF was established in 1993 as an administrative provision and codified into law through the Minerals Development Fund Act (Act 912) in 2016. The MDF and DACF have been essential sources of revenue for MMDAs in mining communities, especially in funding health, education and infrastructure.
However, challenges including late and partial disbursement to the Funds impede the MMDAs’ ability to deliver essential development plans. The Funds also act as funding sources for other institutions and national level interventions. Additionally, disbursements also suffer from top tier deductions due to the application of some legislative frameworks such as the Earmarked Funds Capping and Realignment Act, 2017 (Act 947). These deductions have grave impacts on funds disbursed to MMDAs to further development plans, especially in the education and health sectors.
The education and health sectors are important to economic growth at the local level and require significant investments from MMDAs. These sectors face challenges which include inadequate access to teaching and learning materials, high pupil to teacher ratios, inadequate health infrastructure and high patient to doctor ratios. The socio-economic impacts of mining such as increasing cases of school dropouts and high incidence of respiratory diseases, further worsen the challenges in the health and education sectors for mining communities.
This report assesses the implications of government policies that reduce disbursements to MMDAs through DACF and MDF, particularly in financing development in education and healthcare within the mining communities. It also analyses the importance of MDF and DACF for the development planning, and implementation of programmes in mining communities. This study focuses on three mining districts: Tarkwa Nsuaem Municipality and Prestea Huni- Valley Municipality located in the Western Region, and Asutifi North District located in the Ahafo Region.
The findings of the study are given below:
- DACF and MDF are essential sources of funds for MMDAs in mining communities. Cumulatively, they contribute over 40 per cent of MMDAs’ total revenue, and largely constitute the main source of funding for development projects in the communities.
- Even though these two funds are essential, they experience significant delays in their disbursements. MDF, however, is more reliable than DACF in terms of amount and frequency of disbursement.
- The education and health sectors are priorities for MMDAs’ utilisation of funds. This notwithstanding, significant challenges that militate against quality education and healthcare delivery exist, mainly due to the inadequacy of funds obtained by MMDAs.
- The introduction of laws and policies to absorb part of the DACF and MDF at the national level erode actual disbursement to MM DAs to facilitate context-driven development and quick response to emerging developmental challenges at the local level.
In line with the findings of the study, the following recommendations are made:
- The DACF and MDF should be excluded from the Earmarked Funds Capping and Realignment Act and further legislation that encumbers the funds. Consistently, the passage of new laws that allow the state to reassign portions of DACF and MDF reduces the amount of revenue available to MMDAs and makes it difficult for them to fund local development and, by extension, achieve the object of the funds.
- Government should timely disburse funds to MMDAs to prevent delays and cost overruns on project execution at the local level.
- District assemblies should have the capacity to track and validate disbursements of MDF and DACF allocated to them. This will help them identify the challenge to revenue generation and further demand Government’s action to meet its funding responsibilities…Read More / Download